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Unformatted text preview: Quiz Chapter 4 True/False Indicate whether the statement is true or false. ____ 1. Tina incorporates her sole proprietorship with assets having a fair market value of $100,000 and an adjusted basis of $110,000. Even though 351 applies, Tina may recognize her realized loss of $10,000. ____ 2. Since services are not considered property under 351, a taxpayer must report as income the fair market value of stock received for such services. ____ 3. Beth forms Lark Corporation with a transfer of appreciated property in exchange for all of its shares. Shortly thereafter, she transfers half her shares to her son, Ted. The later transfer to Ted could cause the original transfer to be taxable. ____ 4. The use of 351 is not limited to the initial formation of a corporation, and it can apply to later transfers as well. ____ 5. Carl and Ben form Condor Corporation. Carl transfers cash of $50,000 for 50 shares of stock of Condor. Ben transfers a secret process with a tax basis of zero and a fair market value of $50,000 for the remaining 50...
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